By Steve A. Morrell
Although seasonal quality from Western origins were attributable features of Tea sales last week, prices obtained did not reflect quality Teas on offer. Some Westerns attracted good prices but this trend was not sustained as the sale progressed. Brokers reports said the overall average was around Rs. 348. ($ 3.48 approximately), Distinctly recording minus variance of about Rs.45. per kilo.
Dip in prices were attributed to the Middle East Crisis and more to the point was that buyers were now purchasing their Tea from cheaper markets.
Comparatively India was selling at US $ 1.43, Kenya 1.41, Malawi 0.99 (dollar cents), Viet Nam 0.85, Indonesia, 0.58. The question was ‘Who would pay for high priced Teas?’
What of the ‘Ceylon Tea’, Brand, does not that count? They said it did, but not that it mattered when they could purchase what they wanted from cheaper origins.
Brokers said plantations were now faced with additional costs of fuel, price escalation for electricity, and transport. These cost factors coupled with increased wages and depressed crops because of dry weather , further aggravated an already hopeless situation.
Cost of production on Plantations was now approximately Rs. 420. Per kilo. Immediate pointers were that losses were increasing daily, and insolvency was gravely affecting the Plantation sector.
Additionally some estates are facing worker go-slows. Particularly Estates in the Bogowantalawa sub-district. Workers are refusing to increase their out-put further aggravating a bad situation.
Estates reported that pluckers bring in as little as one kilo a day.
Gulf countries including Syria, Iran, the Arab Emirates, continued to be our main buyers. Tea was exported, but they did not settle their bills promptly. This resulted in vicious chain reaction that escalating debt placed Colombo buying sources in tight financial stress.
Expectations were high that after the Presidents visit to Pakistan they would increase their Tea purchases ex Sri Lanka but that was not to be. Pakistan imports of Ceylon Tea was barely sufficient to make even a dent at the Colombo auctions.
Kenya continued to be Pakistan’s main exporter supplying 31.53 % in January this year. India, Viet Nam, Ruwanda, Indonesia, Uganda, Burundi, were all supply sources, exporting more Tea to Pakistan, than Sri Lanka. Sri Lanka exported just 1.30 % to that destination.
Two weeks ago, we concluded an exemplary Tea conference. One that brought to bear a lexicon of outstanding personnel associated with the Tea industry world wide. Chairman Asia Siyaka Brokers PLC Anil Cooke, said ‘ If you’re looking for cause and effect answer you will not get it. What you will have is that Sri Lanka emerged an important driving cog in the global sphere for Tea’.
However irrespective of the sustained power of organizational skills and successful conclusion of the Tea convention, barely a week or two later, reports from Brokering sources, Producers, and Buyers, were not euphoric in content. They collectively said there would be rough times ahead.
We were unable to glean authentic information from the Planters’ Association of Ceylon (PA) on repercussions of the fuel hike which further relegated them insurmountable costs of production.
This week we would have sufficient information on their options to bridge the growing loss situation.
Last week the loss situation exacerbated because of the fuel hike. Many Plantation Companies were loss making entities.
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